Liability Transfer When SDS Is Outside Liability Transfer When SDS Is Outside - Page 2
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  1. #11

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    Quote Originally Posted by DrStrange View Post
    Well, I kinda thought that an incorrect SDS carried liability for the party making the decision. What you're saying though makes me wonder why clients are reluctant to say "outside" if it's the agency who has the liability for the clients decision?



    I get that liability can be transferred, but I thought that was if the SDS wasn't followed. I struggle to see why an agency recieving an outside SDS who then processes the payments gross can be liable?

    I can see the point of the agency didn't receive an SDS or didn't follow it correctly, but having liability for processing it correctly seems really odd.



    I'm not sure I'll agree to an indemnity - will see what QDOS say I guess


    And there was be thinking I was home and dry!

    Thanks for your comments
    Re the bit in bold. HMRC can do a check and decide that the SDS is wrong and put in a claim for unpaid taxes. This is where the liability then falls to the Fee Payer and is what the Fee Payer is trying to indemnify themselves against.

    As the legislation moves the liability up the chain, not down, I cannot see how an indeminty clause to you would be enforceable. However, would you have the appetite and funds to challenge it? If you can get insurance to cover it, then it should be ok to sign it.

    I totally agree with the sentiment that the client should remain liable for any challenge to the SDS they are issuing. It's a completely nuts clause in the legislation.

  2. #12

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    Quote Originally Posted by ladymuck View Post
    Re the bit in bold. HMRC can do a check and decide that the SDS is wrong and put in a claim for unpaid taxes. This is where the liability then falls to the Fee Payer and is what the Fee Payer is trying to indemnify themselves against.
    I can hear the groans already, but I called HMRC to clarify....

    According to the call centre guy (I know, I know...) they can only go after the agency is the SDS is inside and they still process it gross, or if they deduct taxes but don't pay them to HMRC, or they were complicit in a fraud, or they "led the client to a decision".

    He was adamant that, in this scenario whereby a client took reasonable care and the agency also accepted the reasons for the SDS in good faith, liability would pass back up the chain to the client. Of course, he couldn't provide any links to anything explicitly confirming that...

    I'll wait until I've got the indemnity wording to see if I'll sign up, but once more all I can say is what a bloody mess these rules are....

  3. #13

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    Quote Originally Posted by DrStrange View Post
    I can hear the groans already, but I called HMRC to clarify....

    According to the call centre guy (I know, I know...) they can only go after the agency is the SDS is inside and they still process it gross, or if they deduct taxes but don't pay them to HMRC, or they were complicit in a fraud, or they "led the client to a decision".

    He was adamant that, in this scenario whereby a client took reasonable care and the agency also accepted the reasons for the SDS in good faith, liability would pass back up the chain to the client. Of course, he couldn't provide any links to anything explicitly confirming that...

    I'll wait until I've got the indemnity wording to see if I'll sign up, but once more all I can say is what a bloody mess these rules are....
    Gosh, HMRC doesn't understand gov't legislation shock.

  4. #14

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    Quote Originally Posted by jamesbrown View Post
    Gosh, HMRC doesn't understand gov't legislation shock.

  5. #15

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    Quote Originally Posted by jamesbrown View Post
    I also wouldn’t overstate this risk. Afterall, HMRC can barely win an IR35 case on a good day. Now the entire supply chain is singing from the same sheet. There is really very little value in pursuing such cases, absent fraud. But, yes, the Fee Payer is ordinarily liable when an SDS has been compiled with reasonable care and is subsequently found wrong.
    I can see a situation where insurers would cover this indemnity for a fairly small amount of money.
    I have an indeminity on my house in case a small strip of land is ever claimed by the rightful owner. The insurance cost £130 and is perpetual whilst I live here. The land registry and council records go back 400 years. So the chance of a claim against my ownership is very small indeed.

    On the basis that with the whole supply chain agreeing. And the contractor having some reasonably cheap insurance with enough cover. That this would become a new market.
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  6. #16

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    I would be looking for an insurance product against this, that's for sure.

  7. #17

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    Yeah, belt and braces.

    TBH even with contract clauses, I think you'd be in a much less risky position post-April with an outside contract than before April, simply because the supply chain carries significant risk, regardless of any contract clauses. They will be looking to demonstrate the reality of the outside position under investigation (which is itself very unlikely, absent fraud). The debt can be transferred to any link in the chain above the PSC and a PSC can only pay what it has, even when the clauses succeed. However, one caveat: I would steer well clear of contractual clauses that attempt to transfer liability to the individual, i.e. you.

  8. #18

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    Quote Originally Posted by jamesbrown View Post
    Yeah, belt and braces.

    TBH even with contract clauses, I think you'd be in a much less risky position post-April with an outside contract than before April, simply because the supply chain carries significant risk, regardless of any contract clauses. They will be looking to demonstrate the reality of the outside position under investigation (which is itself very unlikely, absent fraud). The debt can be transferred to any link in the chain above the PSC and a PSC can only pay what it has, even when the clauses succeed. However, one caveat: I would steer well clear of contractual clauses that attempt to transfer liability to the individual, i.e. you.
    Yep...

    Not something I fully understand, but I'm pretty sure that transfer of liabilities in a contract does not trump legislation.
    So where the liability is explicitly the clients' in law, I am not sure that it can just be transferred away But IANAL..... I expect this will be explored in detail, by those in the know, over the coming year.
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  9. #19

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    Quote Originally Posted by Lance View Post
    Yep...

    Not something I fully understand, but I'm pretty sure that transfer of liabilities in a contract does not trump legislation.
    So where the liability is explicitly the clients' in law, I am not sure that it can just be transferred away But IANAL..... I expect this will be explored in detail, by those in the know, over the coming year.
    Surely it doesn't matter as while the client may have to pay the bill, the purpose of the clause is to allow them to reclaim the money from you.

    My concern would be that the client doesn't fight as hard as I would to avoid paying the bill...
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  10. #20

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    Quote Originally Posted by Lance View Post
    Yep...

    Not something I fully understand, but I'm pretty sure that transfer of liabilities in a contract does not trump legislation.
    So where the liability is explicitly the clients' in law, I am not sure that it can just be transferred away But IANAL..... I expect this will be explored in detail, by those in the know, over the coming year.
    Right, you cannot transfer a statutory responsibility. In other words, the debt absolutely would be paid by the supply chain in the first instance. The question is whether it could then be recovered as a matter of contract law and I think this part is sketchy (depends on the nature of the clauses and how they were entered into). Even if they were successful, the liability is limited, by design.

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